Nvidia, the technology company known for its advancements in artificial intelligence (AI), continues to surpass expectations and solidify its position as a leader in the industry. In its fiscal 2024 fourth quarter, Nvidia reported sales of $22.1 billion, a staggering 265% increase compared to the previous year. This remarkable achievement exceeded the company’s own revenue guidance by more than $2 billion.
One of the key factors contributing to Nvidia’s success is the exponential growth in the data center segment, particularly in the sales of advanced AI chips. Three out of four business segments experienced a significant increase in revenue, with only the automotive segment lagging behind. Data center revenue, in particular, soared by over 400% compared to the previous year.
The company’s management is confident that this upward trend will continue, projecting total sales of approximately $24 billion for the current quarter. Moreover, these high-margin products have contributed to an expansion in gross profit margin, which reached almost 73% in fiscal 2024, compared to just 57% in the previous year. The company anticipates that this margin will continue to rise to more than 76% in the current fiscal 2025 first quarter.
Investors have taken notice of Nvidia’s remarkable performance, resulting in a surge in the company’s stock price alongside its sales and earnings. Despite this growth, the stock still appears reasonably priced due to its accelerating trajectory. While a forward price-to-earnings (P/E) multiple of 32 may seem high by traditional standards, this metric could quickly decrease as earnings expand.
Furthermore, Nvidia still possesses untapped potential for growth in other areas. The automotive segment, for instance, could experience rapid expansion if self-driving vehicles become more mainstream. This potential for future growth further reinforces the importance of including Nvidia in the growth stock portion of any investment portfolio.
While Nvidia’s achievements are impressive, it is essential to consider all factors before making investment decisions. The Motley Fool Stock Advisor analyst team, for instance, has identified what they believe are the 10 best stocks for investors to buy now, and Nvidia did not make the cut. However, the 10 stocks that were selected have the potential to generate significant returns in the coming years.
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In conclusion, Nvidia’s exceptional revenue performance and its position as a leader in AI have solidified its dominance in the industry. With its continued growth and potential for expansion in various sectors, Nvidia remains an attractive investment option for those seeking long-term returns.
